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Chapter 2: Q32PGA_4 (page 104)

Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance

The trial balance of Shawn Merry, CPA, is dated March 31, 2018: During April, the business completed the following transactions:

Cash 11,000

Office Supplies 400

Accounts Receivable 16,500

Land 30,000

Furniture 0

Automobile 0

Accounts Payable 3,800

Unearned Revenue 0

Common Stock 52,300

Dividends 0

Rent Expense 800

Salaries Expense 5,600

Service Revenue 8,200

Total Balance \( 64,300 64,300

During April, the business completed the following transactions:

Apr. 4 Collected \)2,500 cash from a client on account.

8 Performed tax services for a client on account, \(5,400.

13 Paid \)3,000 on account.

14 Purchased furniture on account, \(3,600.

15 Merry contributed his personal automobile to the business in exchange for common stock. The automobile had a market value of \)9,500.

18 Purchased office supplies on account, \(900.

19 Received \)2,700 for tax services performed on April 8.

20 Paid cash dividends of \(6,500.

21 Received \)5,700 cash for consulting work completed.

24 Received \(2,400 cash for accounting services to be completed next month.

27 Paid office rent, \)600.

28 Paid employee salary, $1,700.

Requirements

2. Open the four-column ledger accounts listed in the trial balance, together with their balances as of March 31. Use the following account numbers: Cash, 11; Accounts Receivable, 12; Office Supplies, 13; Land, 14; Furniture, 15; Automobile, 16; Accounts Payable, 21; Unearned Revenue, 22; Common Stock, 31; Dividends, 33; Service Revenue, 41; Salaries Expense, 51; and Rent Expense, 52

Short Answer

Expert verified

The trial balance is an accounting worksheet and required trial balance is prepared in Step 2.

Step by step solution

01

Definition of Trial Balance

The trial balance is an accounting worksheet that shows the balance of ledger accounts into debits and credits.

02

Preparing a trial balance

Shawn Merry

Trial balance

April 30, 2018

Account Title

Debit ($)

Credit ($)

Cash

$12,500

Accounts Receivables

$11,300

Office Supplies

$1,300

Land

$30,000

Furniture

$3,600

Automobile

$9,500

Accounts Payable

$5,300

Unearned Revenue

$2,400

Common Stock

$61,800

Dividends

$6,500

Service Revenue

$13,900

Salaries Expense

$7,300

Rent Expense

$1,400

Total

$83,400

$83,400

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Most popular questions from this chapter

Question:Preparing financial statements from the trial balance and calculating the debt ratio

Preparing financial statements from the trial balance and calculating the debt ratio

Account Title Debit Credit

Office Supplies 1,400

Cash 32,000

Accounts Receivable 9,100

Prepaid Insurance 2,600

Equipment 24,000

Accounts Payable 3,400

Unearned Revenue 1,296

Notes Payable 34,000

Common Stock 20,000

Dividends 3,000

Salaries Expense 1,600

Rent Expense 700

Utilities Expense 100

Service Revenue 15,804

Total Balance \( 74,500 \) 74,500

Requirements 4. Calculate the debt ratio as of July 31, 2018.

Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance

The trial balance of John Menning, CPA, is dated March 31, 2018:

Cash 17,000

Office Supplies 1,200

Accounts Receivable 10,500

Land 29,000

Furniture 0

Automobile 0

Accounts Payable 3,800

Unearned Revenue 0

Common Stock 46,200

Dividends 0

Rent Expense 1,000

Salaries Expense 2,500

Service Revenue 11,200

Total Balance \( 61,200 61,200

During April, the business completed the following transactions:

Apr. 4 Collected \)6,000 cash from a client on account.

8 Performed tax services for a client on account, \(5,500.

13 Paid \)3,300 on account.

14 Purchased furniture on account, \(4,000.

15 Menning contributed his personal automobile to the business in exchange for common stock. The automobile had a market value of \)11,500.

18 Purchased office supplies on account, \(1,600.

19 Received \)2,750 for tax services performed on April 8.

20 Paid cash dividends of \(7,500.

21 Received \)4,900 cash for consulting work completed.

24 Received \(2,500 cash for accounting services to be completed next month.

27 Paid office rent, \)900.

28 Paid employee salary, $1,200.

Requirements

1. Record the April transactions in the journal using the following accounts: Cash; Accounts Receivable; Office Supplies; Land; Furniture; Automobile; Accounts Payable; Unearned Revenue; Common Stock; Dividends; Service Revenue; Salaries Expense; and Rent Expense. Include an explanation for each entry.

Journalizing transactions, posting to T-accounts, and preparing a trial balance

Problem P2-42 continues with the company introduced in Chapter 1, Canyon Canoe Company. Here you will account for Canyon Canoe Company’s transactions as it is actually done in practice. Begin by reviewing the transactions from Chapter 1. The transactions have been reprinted below.

Nov. 1 Received \(16,000 cash to begin the company and issued common stock to Amber and Zach.

2 Signed a lease for a building and paid \)1,200 for the first month’s rent.

3 Purchased canoes for \(4,800 on account.

4 Purchased office supplies on account, \)750.

7 Earned \(1,400 cash for rental of canoes.

13 Paid \)1,500 cash for wages.

15 Paid \(50 dividends to stockholders.

16 Received a bill for \)150 for utilities. (Use separate payable account.)

20 Received a bill for \(175 for cell phone expenses. (Use separate payable account.)

22 Rented canoes to Early Start Daycare on account, \)3,000.

26 Paid \(1,000 on account related to the November 3 purchase.

28 Received \)750 from Early Start Daycare for canoe rental on November 22.

30 Paid \(100 dividends to stockholders

In addition, Canyon Canoe Company completed the following transactions for December.

Dec. 1 Amber and Zack contributed land on the river (worth \)85,000) and a small building to use as a rental office (worth \(35,000) in exchange for common stock.

1 Prepaid \)3,000 for three months’ rent on the warehouse where the company stores the canoes.

2 Purchased canoes signing a note payable for \(7,200

4 Purchased office supplies on account for \)500.

9 Received \(4,500 cash for canoe rentals to customers.

15 Rented canoes to customers for \)3,500, but will be paid next month.

16 Received a \(750 deposit from a canoe rental group that will use the canoes next month.

18 Paid the utilities and telephone bills from last month.

19 Paid various accounts payable, \)2,000.

20 Received bills for the telephone (\(325) and utilities (\)295) which will be paid later.

31 Paid wages of \(1,800. 31 Paid cash dividend to stockholders, \)300.

Requirements

1. Journalize the transactions for both November and December, using the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Rent; Land; Building; Canoes; Accounts Payable; Utilities Payable; Telephone Payable; Unearned Revenue; Notes Payable; Common Stock; Dividends; Canoe Rental Revenue; Rent Expense; Utilities Expense; Wages Expense; and Telephone Expense. Explanations are not required. (Hint: For November transactions, refer to your answer for Chapter 1.)

2. Open a T-account for each of the accounts.

3. Post the journal entries to the T-accounts, and calculate account balances. Formal posting references are not required.

4. Prepare a trial balance as of December 31, 2018.

5. Prepare the income statement of Canyon Canoe Company for the two months ended December 31, 2018.

6. Prepare the statement of retained earnings for the two months ended December 31, 2018.

7. Prepare the balance sheet as of December 31, 2018.

8. Calculate the debt ratio for Canyon Canoe Company at December 31, 2018

Consider the following accounts and identify each as an asset (A), liability (L), or equity (E). 1. Rent Expense 6. Accounts Payable 2. Common Stock 7. Unearned Revenue 3. Furniture 8. Notes Receivable 4. Service Revenue 9. Dividends 5. Prepaid Insurance 10. Insurance Expense

Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance

Beth Stewart started her practice as a design consultant on November 1, 2018. During the first month of operations, the business completed the following transactions:

Nov. 1 Received \(41,000 cash and issued common stock to Stewart.

4 Purchased office supplies, \)1,200, and furniture, \(2,300, on account.

6 Performed services for a law firm and received \)2,100 cash.

7 Paid \(27,000 cash to acquire land to be used in operations.

10 Performed services for a hotel and received its promise to pay the \)800 within one week.

14 Paid for the furniture purchased on November 4 on account.

15 Paid assistant’s semimonthly salary, \(1,470.

17 Received cash on account, \)500.

20 Prepared a design for a school on account, \(680.

25 Received \)1,900 cash for design services to be performed in December.

28 Received \(3,100 cash for consulting with Plummer & Gordon.

29 Paid \)840 cash for a 12-month insurance policy starting on December 1.

30 Paid assistant’s semimonthly salary, \(1,470. 30 Paid monthly rent expense, \)650.

30 Received a bill for utilities, \(650. The bill will be paid next month.

30 Paid cash dividends of \)2,800.

Requirements 2. Open a T-account for each of the accounts.
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